Today is the International Day of Older Persons. The world is home to more than 1 billion people over age 60, and two years ago the global number of people over age 65 surpassed that of children under age 5 for the first time in history. These numbers confirm a clear and irreversible trend: the world is aging, and Latin America is the region currently aging the quickest. This means we need to focus on the special needs and challenges this segment of the population faces. Most older people are independent, but older people are still more likely to need help performing daily activities than young people. When budgets are tight, the first question that arises is about funding. This blog post presents an interactive tool that provides a way to visualize the cost of different long-term care packages to help design an achievable long-term care system.
8 million older persons.
There are 8 million older people in the region who need help from a caregiver for daily activities like bathing or eating, which other people do automatically. Caregivers are usually unpaid relatives or friends, although sometimes they are hired formally, and they are usually women. Eight million is a striking number, but there is another figure that is even more staggering: 27 million. This is how many people will need assistance in the future. Countries clearly need to act right away.
Why the urgency? There are three main reasons:
- People are living longer, and care dependence is more prevalent among older people.
- Chronic diseases are on the rise.
- Support from relatives, usually women, is no longer enough.
Clear guidelines and “baby steps” for getting started
In our publication Age with Care, we offer six clear recommendations for countries that want to start designing and investing in comprehensive long-term care systems. “Start” is the operative word here, since countries can start on a small scale and gradually expand the system. You can learn about the 6 recommendations here.
This tool can be used to compare the cost of different service packages
At the IDB, we developed a tool allowing you to calculate how much a long-term care system would cost. The cost simulation tool consists of an Excel spreadsheet that you can download here. It provides a simple costing model to calculate how much a country would have to spend to implement different packages of long-term care services for care-dependent people. It is based on a costing model applied previously in Mexico and Uruguay.
The aim of the cost simulation tool is to inform technical discussions and help decision-makers as they design care systems, especially as they define the beneficiaries and services to be offered in a context of limited funding.
What factors affect costs?
In the model, the amount a country’s government will have to spend on a long-term care system is essentially a function of the number of beneficiaries multiplied by the annual cost of the services, plus the system’s administrative costs. The number of beneficiaries depends on the size of the care-dependent population and the eligibility criteria established by the government, adjusted by the desired coverage level. Meanwhile, the cost of the services is derived from the cost of each individual service the system offers (for example, residential care settings, day centers, and home care) multiplied by the number of system users, as shown in the figure below.
The tools users can change two fundamental public policy parameters in order to compare up to three scenarios:
- The type of services offered by the long-term care system
- The level of coverage of the target population
Information on the population’s current structure is already built into the tool, as is a projection of how that structure will change in the future as the population ages, as well as general information on the cost of the services. The tool also lets users tweak certain variables like costs, care dependence level, and the copayment structure.
The cost simulation tool was applied to seven countries, and the resulting costs for long-term care systems ranged from 0.48% of GDP for Paraguay to 1.47% of GDP for Costa Rica, assuming a generous package with full coverage for people over age 60. By comparison, the average expenditure of OECD countries in 2015 was 1.7% of GDP, ranging from 0.2% in Estonia to 3.7% in the Netherlands.
Download the Cost Simulation Tool and find out how much a long-term care system would cost for your country
We invite you to watch a video on how to use the tool and download the tool’s technical note here: https://www.iadb.org/es/panorama/simulador-de-costos
Did you try the tool? How much would a long-term care system cost in your country? Leave us a comment or mention us at @BIDgente.